Survey of Marketing CH 11-18
associated services
(also called augmented product) The non-physical attributes of the product including product warranties, financing, product support, and after-sale service.
identify three methods that firms use to set their prices
-cost based pricing -competition based pricing -value-based pricing
identify the advantages that brands provide firms and consumers
-facilitate purchases -establish loyalty -protect from competition and price competition -are assets -affect market value
identify tactics used to reduce prices to businesses
-skimming -penetration -loss leader -odd value pricing
factors for establishing a relationship with retailers
1. Choosing Retailing Partners → 2. Identifying types of retailers → 3. Developing a retail strategy → 4. Managing an omnichannel strategy
AIDA model
A common model of the series of mental stages through which consumers move as a result of marketing communications: Awareness leads to Interests, which lead to Desire, which leads to Action.
Franchising
A contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a business using a name and format developed and supported by the franchisor.
Outsourcing
A decision by a corporation to turn over much of the responsibility for production to independent suppliers.
relationship between price and quantity sold
A demand curve shows how many units of a product or service consumers will demand during a specific period of time at different prices. • As price increases, the quantity demanded for a product or service will decrease. • Consider prestige products or services, which consumers purchase for their status rather than for their functionality. The higher the price, the greater the status associated with it and the greater the exclusivity because fewer people can afford to purchase it. • With prestige products or services, a higher price may lead to a greater quantity sold, but only up to a certain point
Service Gaps Model
A managerial tool designed to encourage the systematic examination of all aspects of the service delivery process and prescribes the steps needed to develop an optimal service strategy.
Monopoly
A market in which there are many buyers but only one seller.
penetration pricing strategy
A new product or service pricing strategy in which the initial price is set relatively low with the objective of building sales, market share, and profits quickly and to deter competition from entering the market.
target return pricing
A pricing strategy implemented by firms less concerned with the absolute level of profits and more interested in the rate at which their profits are generated relative to their investments; designed to produce a specific return on investment, usually expressed as a percentage of sales.
target profit pricing
A pricing strategy implemented by firms when they have a particular profit goal as their overriding concern; uses price to stimulate a certain level of sales at a certain profit per unit.
maximizing profits
A profit strategy that relies primarily on economic theory. If a firm can accurately specify a mathematical model that captures all the factors required to explain and predict sales and profits, it should be able to identify the price at which its profits are maximized.
bait and switch
A store advertises bargains that do not really exist to lure customers in, in hopes that they will buy more expensive merchandise.
corporate vertical marketing system
A system in which the parent company has complete control and can dictate the priorities and objectives of the supply chain; it may own facilities such as manufacturing plants, warehouse facilities, retail outlets, and design studios.
horizontal channel conflict
A type of channel conflict in which members at the same level of a marketing channel, for example, two competing retailers or two competing manufacturers, are in disagreement or discord, such as when they are in a price war.
vertical channel conflict
A type of channel conflict in which members of the same marketing channel, for example, manufacturers, wholesalers, and retailers, are in disagreement or discord.
cost of ownership method
A value-based method for setting prices that determines the total cost of owning the product over its useful life.
Advertising
A written or spoken media message designed to interest consumers in purchasing a product or service
alpha testing
An attempt by the firm to determine whether a product will perform according to its design and whether it satisfies the need for which it was intended; occurs in the firm's research and development (R&D) department.
distinguish between brand extension and line extension
Brand Extension - Same brand name in new product line - Example: Gatorade (typically known for drinks) going into food and making energy chews and protein bars Line Extension - Same brand name within the same product line - Example: Colgate toothpaste - Multiple different toothpaste options (optic white, enamel health, etc.) however, all owned and sold by Colgate -Both a line and a brand extension utilize the same brand name, however the products differ from either going into a new product line and selling products with different uses or the same product with the same use in just different variations.
Outline the considerations associated with choosing retail partners.
Channel Structure ●Degree of vertical integration ●Strength of manufacturers brand ●Relative power of manufacturer and retailer Channel member characteristics ●Larger firms can gain more control, be more efficient, and save money
break-even analysis
Costs o Variable Cost- cost of primarily labor and materials, that vary with production volume. o Fixed Cost- costs that remain essentially at the same level, regardless of any changes in the volume of production. o Total Cost- sum of the variable and fixed costs. • Break-even Analysis- technique that enables managers to examine the relationships among cost, price, revenue, and profit over different levels of production and sales. • Break-even Point- the point at which the number of units sold generates just enough revenue to equal the total costs. • Total Variable Cost = Variable Cost per Unit * Quantity • Total Cost = Fixed Costs + Total Variable Cost • Total Revenue = Price * Quantity
fixed costs
Costs that do not vary with the quantity of output produced
List the pricing practices that are illegal or unethical.
Deceptive or illegal price advertising: Deceptive reference prices, Loss-leader pricing, Bait and switch • Predatory Pricing:
Inelastic
Describes demand that is not very sensitive to a change in price
understand the difference between direct and indirect marketing channels
Designing Marketing Channels: 1.Direct Channel: Manufacturer —> customer 2.Indirect Channel One Intermediary: Manufacturer→ Retailer → Customer 3.Indirect Channel Two Intermediary: Manufacturer→ Wholesaler → Retailer → Customer Franchising ●A contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a retail outlet using a name and format developed and supported by the franchiser Power in the Marketing Channel Bases of Power Chain This power exists when one firm has the means or ability to dictate the actions of another member at a different level of distribution POWER (Walmart) ○Reward Power ■Walmart offers rewards, often a monetary incentive, if the wholesalers or manufacturers do what Walmart wants them to do ○Coercive Power ■Arises when Walmart threatens to punish or punishes wholesalers or manufacturers for not undertaking certain tasks ○Referent Power ■If a supplier desperately wants to be associated with Walmart to enable that supplier to attract other retailers' business ○Expertise Power ■Relies on its vast experience and knowledge to decide how to market the wholesalers or manufacturers products ○Information Power ■Because Walmart has vast information about the consumer goods market, it might exert information power over wholesalers or manufacturers by providing or withholding important market information ○Legitimate Power ■Based on getting a channel member to behave in a certain way because of a contractual agreement between the two firms
describe the difference between an everyday low pricing (EDLP) and a high/low strategy
EDLP reduces consumers search costs • High/low strategy provides the thrill of the chase for the lowest price
identify the reasons firms create new products
Firms need to innovate to respond to changing customer needs, prevent declines in sales from market saturation, diversify their risk, and respond to short product life cycles, especially in industries such as fashion, apparel, arts, books, and software markets, where most sales come form new products. Finally, innovations can help firms improve their business relationships with suppliers.
identify marketing metrics used to measure IMC success
IMC - integrated marketing communications: represents the promotion dimension of the six P's. There are 3 elements to IMC strategy, the consumer, the channels that its communicated through, and the evaluation of the results of the communication. (Traditional media)-Firms should examine when and how often consumers have been exposed to marketing communications. They're measuring frequency of exposure. Another way to measure exposure is reach, the percentage of the target population exposed to a specific marketing communication. Marketing communications managers use Gross Rating Points to state their media objectives. (Web based media)- generally uses web tracking software, measures how long someone is on a particular website, if they click on ads, how many pages they viewed and more. Search engine marketing, a way to reach new customers. Click Through Rate (CTR), how often they click in the website. Impressions, how often the ad pops up.
identify the tactics used to reduce prices to consumers
Leasing/rentals: pay a fee for the right to use a product for specific period of time • Price bundling: selling more than one product for s single, lower price • Leader pricing: builds traffic by aggressively pricing regularly purchased item just above cost • Price lining: setting a floor and a ceiling price and then offering price points in between to represent differences in quality
describe how marketing channels are managed
Managing Marketing Channels and Supply Chains through Strategic Relationships ●Strategic relationships ○Mutual trust ○Open communication ○Common goals ○Interdependence ○Credible commitments
explain the difference between a price skimming and a market penetration pricing strategy
Market Penetration: Set price low to build sales, market shares, and profits quickly to deter competition of entering market with low profit margins • Price Skimming: Set price high for consumers willing to pay premium to have innovation first
brand awareness
Measures how many consumers in a market are familiar with the brand and what it stands for; created through repeated exposures of the various brand elements (brand name, logo, symbol, character, packaging, or slogan) in the firm's communications to consumers.
Private label or store brand
Merchandise that meets standards specified by a retail firm and that belongs to it exclusively. Primarily used to insure consistent quality of product as well as to meet price competition
4 levels of price competition
Monopoly- one firm provides the product or service in a particular industry, which results in less price competition. • Oligopolistic Competition- only a few firms dominate. Firms typically change their prices in reaction to competition to avoid upsetting an otherwise stable competitive environment. • Monopolistic Competition- when there are many firms competing for customers in a given market but their products are differentiated. When so many firms compete, product differentiation rather than strict price competition tends to appeal to consumers. This is the most common form of competition. • Pure Competition- a large number of sellers offer standardized products or commodities that consumers perceive as substitutable, such as grains, gold, meat, spices, or minerals. In such markets, price usually is set according to the laws of supply and demand.
explain the methods used to allocate integrated marketing communications IMC budget
Objective-and-task method- An IMC budgeting method that determines the cost required to undertake specific tasks to accomplish communication objectives; process entails setting objectives, choosing media, and determining costs. They begin by finding the communication channels that work best to speak their message then find the most fitting media outlet to use. • Rule-of-thumb method- Budgeting methods that base the IMC budget on either the firm's share of the market in relation to competition, a fixed percentage of forecasted sales, or what is left after other operating costs and forecasted sales have been budgeted. Utilizing prior sales and data analysis they can find the present communication budget.
early adopters
People who adopt new products early, choose new products carefully, and are viewed as "the people to check with" by later adopters
premium pricing
Pricing the highest-quality or most versatile products higher than other models in the product line
substitute products
Products for which changes in demand are negatively related; that is, a percentage increase in the quantity demanded for product A results in a percentage decrease in the quantity demanded for product B.
Omnichannel Strategy (Multichannel)
Selling in more than one channel (e.g., stores, Internet, catalog).
sales promotion
Short-term incentives to encourage the purchase or sale of a product or service
Understand the importance of marketing channels and supply chain management.
The Importance of Marketing Channel/Supply Chain Management - ➔ In the right quantities ➔ To the right locations ➔ At the right times Wholesalers: ●Firms that buy products from manufactures and resell them to retailers ●Convincing wholesalers and retailers to carry new products can be difficult ●A viral marketing program can help create interest among consumers - ○BACK DOOR: consumer - retailer - wholesalers Supply Chain Management Simplified Supply Chain: Manufacturer #1 Manu #2 Manu#3 RETAIL DISTRIBUTION CENTER Store #1 #2 #3 #4 #5 Marketing Channels Add Value ➢It would be cheaper for consumers to buy DIRECTLY FROM MANUFACTURERS, however each participant adds value ○If you buy steak from a local farmer, which product do you need to cook it? Marketing Channel Management Affects Other Aspects of Marketing • Distribution Center: Is a facility for the receipt, storage, and redistribution of goods to company stores and may be operated by retailers, manufacturers, distribution specialists • Fulfillment Centers: are used to ship directly to individual customers • Inventory Management through Just-In-Time Systems • Known as, Quick Response (QR) ●Less merchandise on a more frequent basis ●Firms like → H&M, Zara, F21 have adopted QR inventory systems!
identify the components of the communication process
The communication channel is a term used to characterize the physical means of communication or message sending. Mediums such as print, the internet, radio, television, etc., are all ways of transmitting a message. Still, the medium used must be suitable for reaching the desired recipients. • Advertising is used to present the message as a persuasive form of media. • Advertising is a passive form of media, so it must be highly calculated to ensure the message • reaches its audience. • Public relations is a more interactive form of communication as its primary • goal is building and maintaining a good relationship with the public. • Sales promotion is another • interactive form of communication as it creates incentives for consumers to continue to purchase from a company. Personal selling is a communication process intended to influence the buyer. • Personal selling is often done face to face and is most commonly used in the B2B setting. Direct • marketing addresses the target market directly and, in recent years, has become increasingly • successful due to the use of social media. Online marketing focuses primarily on websites. Brands will use online marketing to educate their consumers on their products and build brand image.
describe the different groups of adopters articulated by diffusion of innovation theory
The diffusion of innovation theory helps firms identify what customers will react to their services or products as they come into the market. For example, innovators are the group of people who want a product as soon as it enters the market. They want to be the first one's to own it. Then there are early adopters who like to buy the product after careful review. They do not take the same risk as innovators as they are a bit more selective with their choices but it is relatively soon when the product comes out. Then there are two majority groups that this theory uses to identify people. First the early majority, do not buy a product or service until bugs and other malfunctions are fixed. Therefore, they are waiting for enhancements in the product. The late majority are the people waiting to see what other people do. Other people's actions affect the late majority a lot. Lastly, laggards are a group of people unwilling to change or adapt to new products or services
Reverse Engineering
The process of taking something apart and analyzing its workings in detail.
describe the components of of a product
The product itself is important, but so are its associated services, such as support or financing. Other elements combine to produce the core customer value of a product; the brand name, quality level, packaging, and additional features.
describe the various types of retailers
The three main categories for types of retailers include; • Food retailers could be supermarkets, supercenters, warehouse clubs, convenience stores, and online grocery retailers. • General merchandise retailers include department stores, full-line discount, specialty, drugstores, category specialists, extreme value, and off price. • Service retailers are firms that primarily sell services rather than merchandise and are a large and growing part of the retail industry
Indicate the advantages of a product's packaging and labeling strategy.
There are two types of packaging that each offer their own benefits for both the consumers and the business. a. Primary Package i. Packaging that the consumer actually uses 1. Examples: A tube of toothpaste, a water bottle, a tub of butter ii. Advantages 1. Consumers seek out primary packaging that is convenient and easy to use and store 2. Businesses can change the shape/size to make it more convenient for consumers a. Philadelphia cream cheese switched to oval tubs for their packaging to ensure a front-facing label and to make it easier for consumers to store in their fridge b. Secondary Package i. Exterior packaging that contains the primary package and the UPC label ii. Advantages 1. Offers additional information that cannot be found on the primary package c. Advantages of both primary and secondary packages i. Add to consumer value by facilitating the convenience of carrying, using, and storing the product ii. Gets the consumers' attention iii. Allows products the opportunity to stand out from their competitors and appeal to different markets - businesses have the chance to change and update their packaging to interest new markets d. Sustainable Packaging i. Product packaging that has less of a negative impact on the environment ii. More recent development iii. Returnable and flexible packing iv. Can help suppliers save money e. Labels i. Used as a communication tool ii. Identify the product and brand iii. Provide necessary and required information about the product to the consumer iv. Certain elements on the labels are required by laws and regulations 1. Serving size, calories, ingredients, fat content, etc. f. Labeling Strategy i. Labels are also used by businesses to promote their product, highlight its benefits, and display the brand design ii. Labels offer another platform for advertising
discuss the 4 factors manufacturers consider as they develop their strategies for working with retailers
What is Retailing? ★The set of business activities that add value to products and services sold to consumers for their personal or family use ★Retailing today is changing, both in the USA and around the world! ★Manufacturers no longer rule many supply chains, ain s they once did ★Some of the largest retailers in the world dedicated to their suppliers what should be made, how it should be configured, when it should be delivered and to some extent what it should cost...
describe the various stages involved in developing a new product or service
When firms develop new products, they go through several steps. Step 1: Generate ideas for the product or service, using several alternative techniques, such as internal R&D, R&D consortia, licensing, brainstorming, tracking competitors' products or services, or working with customers. Step 2: firms test their concepts by either describing the idea of the new product or service to a set of potential customers Step 3: Product development through development of prototype and/or actual product Step 4: firms test market their designs. Step 5: if everything goes well in the test market, the product is launched. Step 6: firms must evaluate the results of the new product or service through analysis of the performance of the new product and make appropriate modifications.
competitor orientation
a company objective based on the premise that the firm should measure itself primarily against its competition
profit orientation
a company objective that can be implemented by focusing on target profit pricing, maximizing profits, or target return pricing
brand licensing
a contractual arrangement between firms, whereby one firm allows another to use its brand name, logo, symbols, or characters in exchange for a negotiated fee
wholesaler
a firm engaged primarily in wholesaling activities
institutional advertising
a form of advertising designed to enhance a company's image rather than promote a particular product
selective distribution
a form of distribution achieved by screening dealers to eliminate all but a few in any single area
demand curve
a graph of the relationship between the price of a good and the quantity demanded
monopolistic competition
a market structure in which many companies sell products that are similar but not identical
indirect marketing channel
a marketing channel containing one or more intermediary levels
pull strategy
a marketing strategy that stimulates consumer demand to obtain product distribution
push strategy
a marketing strategy that uses aggressive personal selling and trade advertising to convince a wholesaler or a retailer to carry and sell particular merchandise
price elasticity of demand
a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price
Gross Rating Points (GRPs)
a measure used for comparing the effectiveness of different media vehicles: average reach x frequency
high/low pricing
a pricing strategy that relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases
top-of-mind awareness
a prominent place in people's memories that triggers a response without them having to put any thought into it
co-op advertising
a sales promotion where the manufacturer and the retailer share the cost
advertising plan
a section of the firm's overall marketing plan that explicitly outlines the objectives of the advertising campaign, how the campaign might accomplish those objectives, and how the firm can determine whether the campaign was successful
Rebranding (Brand Repositioning)
a strategy in which marketers change a brand's focus to target new markets or realign the brand's core emphasis with changing market preferences
unique selling proposition (USP)
a strategy of differentiating a product by communicating its unique attributes; often becomes the common theme or slogan in the entire advertising campaign
communication gap
a type of service gap; refers to the difference between the actual service provided to customers and the service that the firm's promotion program promises
delivery gap
a type of service gap; the difference between the firm's service standards and the actual service it provides to customers
search engine marketing (SEM)
a type of web advertising whereby companies pay for keywords that are used to catch consumers' attention while browsing a search engine
dynamic pricing
adjusting prices continually to meet the characteristics and needs of individual customers and situations
Retailing
all the activities directly related to the sale of goods and services to the ultimate consumer for personal, nonbusiness use
objective and task method
an IMC budgeting method that determines the cost required to undertake specific tasks to accomplish communication objectives; process entails setting objectives, choosing media, and determining costs
price fixing
an agreement among firms to charge one price for the same good
voice-of-customer (VOC) program
an ongoing marketing research system that collects customer inputs and integrates them into managerial decisions
hetergeneity
as it refers to the differences between the marketing of products and services, the delivery of services is more variable
rule-of-thumb methods
budgeting methods that base the IMC budget on either the firm's share of the market in relation to competition, a fixed percentage of forecasted sales, or what is left after other operating costs and forecasted sales have been budgeted
Public Relations (PR)
building good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events
brand elements
characteristics that identify the sponsor of a specific ad
informative advertising
communication used to create and build brand awareness, with the ultimate goal of moving the consumer through the buying cycle to a purchase
5 c's of pricing
competition, costs, company objectives, customers, channel members
premarket test
conducted before a product or service is brought to market to determine how many customers will try and then continue to use it
brand loyalty
consistent preference for one brand over all others
variable costs
costs that vary with the quantity of output produced
core customer value
defines the basic problem-solving benefits that consumers are seeking
Decreasing Depth
delete products within a product line to realign the firm's resources
elastic
describes demand that is very sensitive to a change in price
product development
developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering
increasing depth
firms might add items to address changing consumer preferences or to preempt competitors while boosting sales
Increasing Breadth
firms often add new product lines to capture new or evolving markets and increases sales.
total cost
fixed costs plus variable costs
exclusive distribution
giving a limited number of dealers the exclusive right to distribute the company's products in their territories
beta testing
having potential consumers examine a product prototype in a real-use setting to determine its functionality, performance, potential problems, and other issues specific to its use
Product Life Cycle
introduction, growth, maturity, decline
Supply Chain Management
managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers
brand dilution
occurs when a brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold
oligopolistic competition
occurs when only a few firms dominate a market
communications channel
pathway for communicating data/marketing info from one location to another
distributive fairness
pertains to a customer's perception of the benefits he or she received compared with the costs (inconvenience or loss) that resulted from a service failure
explain the difference between a products mix's breadth and a product line's depth
product line breadth: The breadth of the product mix consists of all the product lines that the company has to offer to its customers. depth of the product line: Line depth refers to the number of subcategories a category has. product mix: The complete set of all products a business offers to a market.
consumer products
products purchased by the ultimate consumer
return on marketing investment (ROMI)
quantifying just how an investment in marketing has an impact on the firm's success, financially and otherwise
procedural fairness
refers to the customer's perception of the fairness of the process used to resolve complaints about service
experience curve effect
refers to the drop in unit cost as the accumulated volume sold increases; as sales continue to grow, the costs continue to drop, allowing even further reductions in the price
direct marketing
sales and promotional techniques that deliver promotional materials individually
marketing channel management
selecting, managing, and motivating individual channel members and evaluating their performance over time
preditory pricing
selling a product below cost to drive competitors out of the market
competition-based pricing
setting prices based on competitors' strategies, prices, costs, and market offerings
loyalty programs
specifically designed to retain customers by offering premiums or other incentives to customers who make multiple purchases over time
intensive distribution
stocking the product in as many outlets as possible
concept testing
testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal
customer service
the ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience
Sales Orientation
the belief that people will buy more goods and services if aggressive sales techniques are used and that high sales result in high profits
price discrimination
the business practice of selling the same good at different prices to different customers
income effect
the change in consumption resulting from a change in real income
cause-related marketing
the cooperative marketing efforts between a for-profit firm and a nonprofit organization
brand equity
the differential effect that knowing the brand name has on customer response to the product or its marketing
brand association
the linking of a brand to other favorable images
market saturation
the longer a product exists in the marketplace, the more likely it is that the market will become saturated
direct marketing channel
the manufacturer sells directly to the buyer
pure competition
the market structure that exists when there are many small businesses selling one standardized product
distribution intensity
the number of supply chain members to use at each level of the supply chain
cross price elasticity
the percentage change in demand for product A that occurs in response to a percentage change in price of product B
actual product
the physical attributes of a product including the brand name, features/design, quality level, and packaging
co-branding
the practice of using the established brand names of two different companies on the same product
diffusion of innovation
the process by which the use of an innovation, whether a product or a service, spreads throughout a market group over time and over various categories of adopters
growth stage
the second stage of the product life cycle when sales typically grow at an increasing rate, many competitors enter the market, large companies may start to acquire small pioneering firms, and profits are healthy
advertising schedule
the specification of the timing and duration of advertising
social marketing
the use of commercial marketing concepts and tools in programs designed to influence individuals' behavior to improve their well-being and that of society
breadth of product line
the variety of different items a store carries
managing risk through diversity
through innovation, firms often create a broader portfolio of products, which help them diversify their risk and enhance firm value better than a single product can
informational appeal
used in a promotion to help consumers make purchase decisions by offering factual information and strong arguments built around relevant issues that encourage them to evaluate the brand favorably on the basis of the key benefits it provides
product-focused advertisements
used to inform, persuade, or remind consumers about a specific product or service
subsitution effect
when consumers react to an increase in a good's price by consuming less of that good and more of other goods
Explain the various components of brand equity.
• Brand equity- or the set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service. • 1. Brand awareness- measures how many consumers in a market are familiar with the brand and what it stands for and have an opinion about it. • 2. Perceived value- of a brand is the relationship between a product's or service's benefits and cost. • 3. Brand associations- reflect the mental and emotional links that consumers make between a brand and its key product that consumers make between a brand and its key products attributes, such as a logo and its color, slogan, or famous personality. • 4. Brand loyalty- occurs when a consumer buys the same brand's product or service repeatedly over time rather than buy from multiple suppliers within the same categories.
identify the types of consumer products
• Consumer products- are products and services used by people for their personal use. • 1. Specialty products and services- are those for which consumers express such a strong preference that they expend considerable effort to search for the best suppliers. • 2. Shopping products and services- are products or services for which consumers will spend a fair amount of time comparing alternatives, such as furniture, apparel, fragrances, appliances, and travel alternatives. • 3. Convenience products and services- are those products or services for which the consumer is not willing to spend any effort to evaluate prior to purchase. • 4. Unsought products and services- are products consumers either do normally think of buying or do not know about at all.
list three levels of distribution intensity
• Distribution intensity- the number of channel members to use at each level of the marketing channel. • 1. Intensive distribution- strategy is designed to place products in as many outlets as possible. • 2. Exclusive distribution- policy by granting exclusive geographic territories to one or very few retail customers so no other retailers in the territory can sell a particular brand. • 3. Selective distributive- which relies on a few selected retail customers in a territory to sell products.
factors influencing price elasticity of demand
• Income Effect- the change in the quantity of a product demanded by consumers due to changes in their incomes. • Substitution Effect- consumers' ability to substitute other products for the focal brand. • Cross-Price Elasticity- the percentage change in the quantity of Product A demanded compared with the percentage change in price in Product B. o Complementary products- products whose demands are positively related, such that they rise or fall together. o Substitute products- changes in their demand are negatively related.
Explain the product life cycle
• Product life cycle- defines the stages that products move through as they enter, get established in, and ultimately leave the marketplace. • 1. Introduction stage- companies attempt to gain a strong foot hold in the market quickly by appealing to innovators. • 2. Growth stage- marked by a growing number of product adopters, rapid growth in industry sales, and increase in both the number of competitors and the number of available products versions. • 3. Maturity stage- is characterized by the adoption of the product by the late majority and intense competition for market share among firms. • 4. Decline stage- they either position themselves for a niche segment of diehard consumers or those with special needs or they completely exit the market. . Knowing where a product or service is in its life cycle helps managers determine its specific strategy at any given point in time.
4 pricing orientations
• Profit Orientation- focusing on target profit pricing, maximizing profits, or target return pricing. • Sales Orientation- believe that increasing sales will help the firm more than will increasing profits. • Competitor Orientation- strategize according to the premise that they should measure themselves primarily against their competition. Competitive parity, which means they set prices that are similar to those of their major competitors. Status quo pricing, changes prices only to meet those of the competition. • Customer Orientation- when it sets its pricing strategy based on how it can add value to its products or services.
identify the benefits and challenges of omni channel retailing
○Deeper and broader selection ○Personalization ○Expanded market presence ○Integrated CRM ○Brand image ○Pricing ○Supply chain
Determine the various types of branding strategies used by firms.
● Whether to use a manufacturer brand vs the retailer/store brand ○ Should a brand use a name like Kraft, Nike, Coca-Cola (national/manufacturer brands) or should it use Kroger, Costco, Market Basket (Private Label/Store brands) ● How to name a brand and product lines ● Whether the brand name should be extended to other markets and products ○ Family Brands (Kraft) versus individuals brands (Velveeta) ■ Kraft owns Velveeta however, they utilize different brand names ● Should the brand name be used/licensed to another firm ● Should the brand be repositioned or not?
distribution center advantages
●More accurate sales forecasts due to many stores ●Lower inventory in each store, therefore lower overall inventory costs ●Easier to avoid running out of stock or having too much stock in any particular store ●It is less expensive to store in a remote warehouse then expensive retail location
describe the components of a retail strategy
●Product- Providing the right mix of merchandise and services that satisfies the needs of the target market ●Price- Defines the value of both the merchandise and the service provided ●Promotion- Retailers use a wide variety of promotions within their retail environment and through mass and social media ●Place- convenient location is important to success because many customers choose stores based on where they are located and great locations can create a competitive advantage ●Presentation- lighting, color, smells, and music are used to highlight merchandise and create a mood that will attract the store's markets. ●Personnel- well trained sales personnel can influence the sale at the point of purchase